Leaked EU GATS requests

Contents:

1. Australian Financial Review story
2. AFTINET media release: EU requests Australia Post and water privatisation
3. EU's secret plans hold poor countries to ransom

Contact: Louise Southalan lsouthalan@piac.asn.au

1. EU wants slice of our services by Mark Davis Australian Financial Review 27/2/03 p.3

Australia is under pressure to open up politically sensitive service industries to greater foreign competition as the European Union uses global trade negotiations to target restrictions in postal services, telecommunications, banking and insurance and legal and accounting services. The EU has also asked Australia to scrap its foreign investment laws, which allow the federal government to reject takeovers and other investments by foreign firms if they are against national interest.

The EU demands are contained in a series of confidential "initial requests" lodged with Australia under the World Trade Organisation's general agreement on trade in services (GATS) negotiations.

The requests, a copy of which has been obtained by The Australian Financial Review, would also expose financial, business and professional services to greater competition. But the more politically sensitive and sector-specific demands in the EU requests seek:

• Greater market access for EU firms to compete against Australia Post, including in the delivery of standard letters.

• Removal of limits on foreign ownership of Telstra and more flexibility for foreign investors to buy into Optus and Vodafone.

• More scope for EU firms to gain access to the local market for water collection and distribution services.

Fair Trade campaigner Patricia Ranald of the Public Interest Advocacy Centre said yesterday the EU's requests would remove the right of state and territory governments to regulate and provide essential services. Dr Ranald, who is principal policy officer with the Public Interest Advocacy Centre, said the requests on postal services would open up delivery of standard-sized letters to private sector competition. This would undermine Australia Posts' ability to use cross-subsidisation to maintain its standard letter delivery service for the cost of a 50c stamp. She also said the EU claims in the water distribution sector "would threaten most state government policies of public ownership and price regulation of water services to ensure they remain accessible and affordable to all Australians".

"The danger is that access to essential services will be traded off in the hope of gains in agriculture or other areas that are being negotiated in the WTO" Dr Ranald said.

She called on the Howard government to publicly release its responses to the EU requests, which are due at the end of March, as well as its responses to requests it has received from other governments under the GATS negotiations.

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A leaked secret European Union document about the current WTO Trade in Services (GATS) negotiations shows that the right of Australian governments to regulate and provide essential services is under threat , says Dr Patricia Ranald, of the Public Interest Advocacy Centre. Dr Ranald also convenes AFTINET, a network of 62 community organisations concerned about the impact of trade negotiations on public policy. "The EU document demands that Australia abolish the powers of the Foreign Investment Review Board to review foreign takeovers of Australian firms on the basis of national interest considerations," Dr Ranald explained.

Dr Ranald said the document also demands that Australia

• treat water services purely as traded goods, opening them to private investment. This would threaten most state government policies of public ownership and price regulation of water services to ensure they remain accessible and affordable to all Australians.
• treat public postal services purely as traded goods and open them to private investment. This would mean an end to the 50c stamp to send a letter anywhere in Australia, which makes postal services affordable to rural communities
• remove the limits on foreign ownership of shares in Telstra

"Australia is the driest continent, and we cannot take the risk of leaving the provision of water to market forces. Privatisation of public postal services would not only mean higher prices, but post offices would disappear from country towns which have already been deserted by the banks," said Dr Ranald.

Dr Ranald explained: "These negotiations are held behind closed doors. The Australian government has not made public the full detail of these requests in the discussion document it released in January. It is due to respond to the requests by the end of March but it has not agreed to make its responses public. The danger is that access to essential services will be traded off in the hope of gains in agriculture or other areas which are also being negotiated in the WTO."

"We call upon the government to postpone the March deadline and make public its responses to these requests and to those it has received from other governments, so they can be publicly debated. Policy on essential public services should be publicly debated and decided democratically by governments, not secretly signed away in trade agreements" she added.

The documents are available at www.gatswatch.org/requests-offers.html

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3. EU's secret plans hold poor countries to ransom

Larry Elliott and Charlotte Denny, Tuesday February 25, 2003, The Guardian

The European Union has drawn up secret plans aimed at prising open service sector markets in the world's poorest countries in return for cutting its lavish farm subsidies, it was revealed last night. The demands under the World Trade Organisation's service sector talks target 109 countries, including the 50 least developed, and would allow European firms to charge for providing water to some of the 1.2bn people living on less than a dollar a day. Details of the blueprint leaked to the Guardian yesterday showed that the EU has demanded a high price for allowing developing countries access to its highly protected farm markets. Brussels is determined to win large gains for its highly competitive banking, telecoms and business service firms in the new round of global trade talks launched 14 months ago.

Brussels is under intense pressure to axe export subsidies which depress global food prices and impoverish farmers in the developing world. Reform of the common agricultural policy is the top demand from the EU's trading partners. "The EU is explicitly linking these requests to agriculture and saying we have to get something for our service sector companies, before we give up our farm subsidies," said Barry Coates, head of the world development movement. "It reveals why they keep these demands secret - their agenda isn't pro-development. This is what they regard as their goodies from the new trade round."

Development campaigners say that poor countries would have their hands tied if they agreed to the EU's requests and be unable to respond in the way Labour did in the UK when it effectively renationalised a failing Railtrack. "These commitments are effectively irreversible, if privatisations get botched there is no way out," said Mr Coates. "By making such commitments, developing countries would be affecting generations to come."

Campaigners believe that faced with the batteries of industry lobbyists the EU is wielding to make its case, countries could end up signing deals they will later regret. Among its demands, the EU is demanding that Bolivia let in more foreign water companies despite outrage after a multinational company increased water prices by 200% in the country's third largest city. The EU is also targeting Panama where water privatisation plans were scrapped in 1998 after strikes and demonstrations, and Trinidad where UK company Severn Trent lost the contract for managing the water authority four years ago.

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